Tuesday, June 06, 2017

Click fraud claim against Google fails

Singh alleged that Google falsely induced small businesses
to participate in AdWords, resulting in payment for invalid clicks. Singh
alleged: (1) breach of the implied covenant of good faith and fair dealing; (2)
violations the UCL; (3) violations of the FAL; and (4) fraud in the inducement.
The court granted Google’s motion to dismiss.

Because advertisers are charged by the click, Google
maintains policies and practices to prevent click fraud, and the Google Ad
Traffic Quality Resource Center states that “advertisers are not charged for
[invalid] clicks or impressions.” Singh challenged Google’s representations
that click fraud occurred infrequently and that Google had robust systems in
place to effectively filter out the “vast majority” of invalid clicks and
prevent customers for being charged for those clicks.

The contractual claim failed. Google acknowledges the existence of click
fraud and the possibility that an advertiser would be charged for fraudulent
clicks. Singh argued that the implied covenant covered frustration of purpose,
and that his expectations were informed by the false and misleading
representations in Google’s public postings. But Singh didn’t explain how the
extra-contractual statements can provide the basis for a claim for breach of
the implied covenant, particularly where, as here, the contract contained an
integration clause.

UCL, FAL, fraudulent inducement: A UCL claim can’t rest on a
claim for breach of the implied covenant of good faith and fair dealing. Unfairness: “An act or practice is unfair if
the consumer injury [1] is substantial, [2] is not outweighed by any
countervailing benefit to consumers or to competition, and [3] is not an injury
the consumers themselves could reasonably have avoided.” This is a balancing
test; a practice will be found unfair “when it offends an established public
policy or when the practice is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers.” Singh alleged that Google misrepresented the
likelihood that customers would actually incur charges for a significant volume
of invalid clicks by assuring them that (1) such clicks represent a small
percentage of all clicks; (2) that Google filters out the “vast majority” of
all such clicks; and (3) customers would only pay when interested individuals
click on their ad. But Google disclosed the risk of click fraud in its contract
and elsewhere, and provided a process allowing advertisers to be compensated
for charges related to invalid clicks.

Perhaps most significantly, Singh didn’t plausibly plead that
Google misrepresented the likelihood that customers would actually incur
charges for a significant volume of invalid clicks. Singh’s conclusory
allegations that the claims process provided by Google to deal with invalid
clicks was illusory was insufficient.
The court applied Rule 9(b)’s heightened pleading requirements for fraud
to Singh’s challenges to the following claims:

• “[I]nvalid [or fraudulent] clicks
account for less than 10% of all clicks on AdWords ads.”

• “When Google determines that
clicks are invalid, we try to automatically filter them from your reports and
payments so that you’re not charged for those clicks.”

• “Advertisers rely on the
relevance of our ad placement, our reporting statistics, and the quality of the
clicks their ads receive. Publishers in turn count on advertiser participation,
relevant ads which create a good experience for users, and an accurate and
reliable source of income which contributes to the success of their websites
and business. We take this trust seriously and we know that the Google
advertising networks couldn’t exist without it.”

• “[Google has] a global team which
is dedicated to staying on top of your concerns, monitoring traffic across
Google’s ad network, and preventing advertisers from paying for invalid
traffic.”

• “The vast majority of all invalid
clicks on AdWords ads are caught by our online filters. These filters are
constantly being updated and react to a wide variety of traffic patterns and
indications of click fraud attacks.”

• Investigations prompted by customer
inquiries are “relatively rare” and such investigations identify invalid clicks
representing less than .02% of all clicks.

• “[C]harges are solely based on
Google’s measurements for the applicable Program, unless otherwise agreed to in
writing.”

Singh needed to explain his allegations that these
statements were fraudulent. He relied on
an “experiment” he conducted, as well as a 2013 article in the Atlantic. Singh
alleged that he created four advertisements, in two pairs, one of which was a
“Standard Ad” and the other an “Experimental Ad” that was gibberish. He
asserted that no person would have clicked on the Experimental Ads, and
therefore extrapolated that all clicks on the Experimental Ads were fraudulent
or invalid; comparing that to the Standard Ads, he concluded that 35-50% of all
clicks on AdWords ads were fraudulent. The experiment was “utterly implausible
and would not be admissible in any form.”
Nor could Singh use the Atlantic article to bolster his claims. The
article allegedly states that 60 percent of all Internet traffic is the result
of bots, many of which consist of software that provides false ad views. Among
other things, the article undermined Singh’s allegations that he was not aware
of the possibility that the rate of click fraud might be high; as to falsity, “neither
the experiment nor the magazine article says anything about the efficacy of
Google’s filters.” Nor did Singh adequately allege that he was ever charged for
invalid clicks.

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